Thursday, May 28, 2009
The Commerce Department reported(.pdf) a modest increase in new home sales during April, far less than analysts had expected, and sales prices continued to tumble.
April new home sales rose 0.3 percent to an annual rate of 352,000, up from a downwardly revised level of 351,000 in March that was previously reported as 356,000 units.
The median sales price rose 3.7 for the month but fell 14.9 percent from a year ago to just $209,700, a figure that is still heavily influenced by builder incentives that, in many cases, total many thousands of dollars.
In an optimistic sign for the depressed home building industry, the inventory of unsold homes dropped to its lowest level in eight years, down 4.2 percent in April to 297,000, helping to reduce the supply of unsold homes to just 10.1 months, the lowest reading since February of last year.
The bigger housing news this morning was probably the Mortgage Bankers Association report that mortgage delinquencies and foreclosures rose to new all-time highs during the first quarter of the year.
The U.S. delinquency rate rose to 9.1 percent and 1.4 percent of all home loans entered foreclosure between January and March, both figures the highest ever since the organization began keeping records back in 1972.
Of course, mortgage rates that are now surging even faster than foreclosure rates are not going to make it any easier for the housing market to rebound. While Freddie Mac reported 30-year fixed mortgage rates rising to 4.91 percent in their weekly survey, in a WSJ report from this morning, mortgage data publishing firm HSH Associates said that average 30-year mortgage rates jumped from 5.03 percent to 5.29 percent just yesterday.
It looks like the Federal Reserve needs to get busy buying some more U.S. Treasuries and mortgage securities or, before we know it, freakishly low long-term rates (widely believed to be a necessary prerequisite for an economic recovery) will soon be a thing of the past.